Top of the list has been the variance in currency values across the US, Mexico and Canada that have governed many trade decisions.

The US has been affected by a strong and remarkably high dollar in comparison with the rest of the world currencies.

Canada too has seen a strong Canadian dollar although economists are now predicting that this strength could be turning and the value dropping or correcting itself.

The Mexican peso, however, has been weak, at under 16 pesos to the US dollar when most economists feel it should be between 16.6 and 17 pesos.

The North American pig sector has also continued to be hit by the effects of the Porcine Epidemic Diarrhoea crisis, which although reduced is still having some influence on production.

Whereas last year the number of piglets per litter surviving was about half, the live numbers through this winter improved beyond some commentators’ expectations, putting more potential pigs on the market and reducing prices.

In the US, at the beginning of the year, the pig meat trade and exports were also hampered by a strike in the West Coast docks that prevented many shipments.

The costs of production are expected to be at five-year lows in this year. Total costs are estimated at $52.25 per live hundredweight, compared to $57 in 2014.

The biggest fall in feed costs in 2015 is expected to come from soybean meal, which has been estimated at $120 a tonne lower at $360 per tonne this year compared to $478 in 2014 based on Decatur high-protein prices.

Corn costs are expected to be $3.83 per bushel this calendar year compared to $4.09 in 2014.
The final factor that will be influencing the North American pig market this year will be the outcome of the dispute between the US and Mexico and Canada over Country of Origin Labelling (COOL).

The latest decision from the World Trade Organization (WTO) has been expected in May, although even this decision might not be the final twist in this lengthy dispute.

US Market

According to the USDA’s Quarterly Hogs and Pigs Report, the United States inventory of all hogs and pigs on 1 March was 65.9 million head. This was up by seven per cent from March 2014 but down slightly from December 2014.

The breeding inventory, at 5.98 million head, rose by two per cent from last year, and was up by one per cent from the previous quarter.

The market hog inventory, at 60.0 million head, was up by eight per cent from last year, but down slightly from last quarter.

The pig crop for the quarter from December 2014 to February 2015, at 28.8 million head, saw a rise of nine per cent from 2014.

Sows farrowing during this period reached 2.83 million head, an increae of two per cent from 2014.

The sows farrowed during this quarter represented 48 per cent of the breeding herd.

The average pigs saved per litter was a record high 10.17 for the December-February period, compared to 9.53 last year.

Pigs saved per litter by size of operation ranged from 7.90 for operations with 1-99 hogs and pigs to 10.20 for operations with more than 5,000 hogs and pigs.

The report says that the United States hog producers intended to have 2.87 million sows farrow during the March-May 2015 quarter, a rise of two per cent from the actual farrowings during the same period in 2014, and up by two per cent from 2013.

Intended farrowings for June-August 2015, at 2.93 million sows, are down by two per cent from 2014 but up by one per cent from 2013.

The total number of hogs under contract owned by operations with over 5,000 head, but raised by contract operators, accounted for 46 per cent of the total United States hog inventory, down from 48 per cent last year.

The USDA has revised its all inventory and pig crop estimates up for March 2014 to December 2014 using the final pig crop, official slaughter, death loss, and updated import and export data.
The inventory rose by 0.1 per cent for December.

For the first quarter of 2015, the US pig industry slaughtered a total of 28.5 million head, up six per cent from 2014, according to the USDA’s National Agricultural Statistics Service monthly Livestock Slaughter report.

US Pork Exports

The most recent export figures show that in February pork shipments accounted for 25 per cent of total production and 20 per cent for muscle cuts only – lower than a year ago but a significant improvement over January.

Export value per head slaughtered was down in February by 11 per cent to $51.86 and down by 13 per cent for January-February to $49.16.

Total US global pork and pork variety meat exports fell in the first two months of the year to 334.
February export volume to Korea rose reaching 22,615 tonnes – up 79 per cent from a year ago and the largest monthly total in nearly four years. The export value nearly doubled to $72.1 million.

For January-February, exports to Korea increased by 58 per cent in volume to 37,877 tonnes and 77 per cent in value to $123.5 million.

Taiwan was the only other bright spot in Asia for US pork, where February exports rose by 149 per cent in volume to 1,763 tonnes and 131 per cent in value to $3.7 million compared to a year ago.

For the first two months of the year, exports to Taiwan were up by 86 per cent in volume at 2,770 tonnes and 59 per cent in value to $5.6 million when compared to last year’s low levels.

However, according to the US Meat Export Federation, this growth has been offset by lower exports to Japan and China and Hong Kong.

February pork exports to Japan fell by six per cent in volume to 33,582 tonnes and 11 per cent in value to $124.2 million from a year ago.

For January-February, exports fell by nine per cent in volume declining to 68,150 tonnes and 16 per cent in value at $254.1 million.

For China and Hong Kong, February exports were down by 41 per cent from a year ago in both volume at 21,903 tonnes and value at $49.7 million.

January-February exports fell by 45 per cent to 39,584 tonnes, valued at $92.4 million.

The USMEF president and CEO said: “The West Coast port situation was particularly damaging for our chilled pork exports to Japan because it compromised our ability to meet customers’ shelf-life requirements.

“The ability to ship chilled product to Japan has always given US pork a distinct quality advantage over frozen pork from Europe.

“Now that we have chilled pork moving again, it is very important that we recapture this customer base. But this will not be easy, as pork from the EU continues to enter Japan at lower-than-usual prices. This is exacerbated by the strength of the US dollar versus both the yen and euro.”

February pork exports to Mexico were up by eight per cent in volume, reaching 58,055 tonnes but slipped by four per cent in value to $104.9 million.

For January-February, exports to Mexico reached 117,361 tonnes a rise of three per cent valued at $217.7 million, which was down by two per cent.

Pork exports to most Western Hemisphere markets trended higher year-over-year in February, including Canada, the Dominican Republic, Honduras and Guatemala, though exports were lower to Colombia and Chile.

Mexico’s Pork Market

Pig meat production in Mexico has seen a steady rise over the last decade and this year it is expected to reach 1.34 million tonnes – a rise of 3.88 per cent on 2014 when it reached 1.29 million tonnes.

The country is now the 16th largest pig meat producer in the world but relies significantly on imports.

Half of Mexico’s pig meat production and a third of domestic consumption is imported with more than 90 per cent coming from the USA and Canada under the North American Free Trade Agreement (NAFTA).

At the end of last year, the Mexican government opened up the market to exporters from outside of the NAFTA area but this move has met with strong opposition from the Mexican Pig Producers Associations, who believe that the move will drive prices down.

According to the Mexican Agriculture Ministry (SAGARPA) National Pig Farms Census, the country has 54,613 registered production units.

However, a volatile exchange rate and rising production costs have seen some regions making a loss on production over recent months for the first time in 18 months. Production costs have risen by 22 per cent since November last year and the Mexican peso has fallen in value by 17 per cent.

Mexico, however, has received a boost for it exports by being recognised by Japan as being free from Classical Swine Fever. Last year, Mexico exported 73, 554 tonnes of pig meat to Japan.
Mexico has also opened up markets to China and South Korea for its pig meat.

Canadian Pork Market

The Canadian pig herd reached 13.165 million at the end of 2014 with 1.22 million breeding stock over six months and 1.196 million sows and gilts.

The latest figures from Agriculture and Agri-Food Canada show that to the middle of April this year the slaughter figures had risen to 6,444,036 from 6,332,416 for the same period last year – a rise of 1.8 per cent.

The US, Japan and Mexico are the main destinations for Canadian pork exports with the US taking more than 25 per cent more this year so far reaching 109,200 tonnes in January to March compared to 87,100 tonnes for the same period in 2014.

Mexico saw a 33.2 per cent rise in the amount of pig meat it took from Canada in the first three months of the year, with a total of 29,300 tonnes compared to 22,000 tonnes last year.

The rise in exports to Japan was just 9.86 per cent this year, reaching 52,600 tonnes.

The biggest slump in exports was to Russia, where because of the blockade on imports, Canadian pork shipments fell by 99.8 per cent up to March, from 37,700 tonnes in 2014 to just 72.7 tonnes this year.

Exports to China were also more than halved, falling by 54.8 per cent to 14,800 tonnes for the first three months of the year compared to 32,700 tonnes in 2014.

The total Canadian pork exports this year have dropped by 1.08 per cent in volume to 280,800 tonnes from 283,900 tonnes. The value of these exports also fell by 1.9 per cent to C$825,003,263 from C$840,767,292 in 2014.

Live hog exports to the US have risen sharply largely spurred on by a 57 per cent rise in barrows, gilts and sows. Total live exports for the first two months of the year were 1.527 million head compared to 1.330 million last year.

Canadian pork imports fell sharply, down by 48 per cent to just 28,992 tonnes compared to 55,788 tonnes in the first two months of 2014.

The most significant drop was in pork imports from the US, which fell by 61 per cent in the two months to 12,873 tonnes from 32,985 tonnes.

June 2015